A d v ic e Pa p er (11-15)

NO V E M BE R 2 0 1 1

Broadband Infrastructure in Scotland:

a response to the Scottish Parliaments Infrastructure and Capital Investment Committee.

Scotlands broadband infrastructure will not only support the delivery of services, information and entertainment to consumers in Scotlands homes, but will also enable Scotlands citizens, communities, and businesses to become producers of value in the digital economy. It will increase the efficiency of commerce, government, public services, social collaboration, and education, all of which depend crucially on communication. Our response concentrates on the requirements for a core fibre network that must reach every community, for two fundamental reasons:

A fibre backbone is required to accommodate present and future demand for fixed and wireless connections to the internet.The capacity and resilience of this core fibre network will limit, or enable, local connectivity across Scotland. This fibre backbone represents a long-term infrastructure investment, with an anticipated lifetime of over 30 years.

Key points
An internationally competitive digital infrastructure is critical to sustainability, economic success, and social and cultural well-being over the coming decades. The Scottish Government should establish an open backhaul network reaching every community in Scotland 1. Because of Scotlands dispersed population and its geographical location, its need for a good telecommunications infrastructure is greater than that of many other countries in Europe. It lags behind key competitors in providing such an infrastructure, and their lead is increasing. The crucial problem is lack of a pervasive and accessible fibre backbone.A fibre backbone network is necessary to enable the delivery of mobile 2 and fixed connectivity at the next-generation speeds that our leading competitors already have in place 3. If the provision of broadband is left to the current vertical organisation of national Internet Service Providers (ISPs) that provide both consumer service and the national infrastructure, there will be few incentives to develop

that backbone. Furthermore, where it is developed by vertical organisations, economic pressures lead them to exclude others who might otherwise share this core infrastructure. The way to maximise economic and social benefit is to develop an open access backbone that will support the communication needs of government, health services and education; and will enable a variety of organisations including small businesses, community enterprises and local authorities to innovate and compete to provide local distribution and services. Other countries 4 have built open access national networks, and there is ample evidence that Scotland has the enterprise and talent to develop local distribution. It is essential that there is co-ordination to develop this network independently of the services it will support. The current vertical system, in which various agencies (Government, Health, Education, ...) independently procure connectivity along with the services they require, is both wasteful and detrimental to innovation.

1 In order to access the benefits of the Digital Society, the Digital Scotland report recommends that every community of 2,000 people in Scotland must have access to a fibre connection to the global internet.To enable competition and innovation, this connection must be open on fair and equitable terms to independent service providers, large and small. 2 Cisco projects that Wifi will overtake wired network traffic by 2015; Cisco Visual Networking Index (VNI) Global IP Traffic Forecast http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-481360_ns827_Networking_Solutions_White_Paper.html 3 Next generation is a vague term. We shall use superfast for speeds in excess of 25Mbs and ultrafast for speeds in excess of 100Mbs 4 Sweden, N Wales and Regions of Canada

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Background
1 The Royal Society of Edinburgh, Scotlands National Academy, recently undertook its own inquiry into broadband and published its report Digital Scotland in October 2010.This report was produced by an expert RSE Working Group, with input from a wide range of stakeholders and a public consultation. Digital Scotland clearly articulates the need for digital connectivity; how Scotland currently compares with its competitors; and the infrastructure that is needed to bring high speed broadband to every citizen. The RSE welcomes this opportunity to continue to contribute to the development and scrutiny of a digital strategy for Scotland.This response has been prepared by the RSE Digital Scotland Working Group, and oral evidence to the Committee will be provided by the Chair of the Group, Professor Michael Fourman. The RSE would take this opportunity to emphasise the increasingly urgent need to move from discussion to action as broadband speeds continue to accelerate and the digital divide between Scotland and its competitors, and within Scotland, grows. 7 A process is needed through which information on how such initiatives were successfully carried out can be proactively shared.This must include channels through which contacts can easily be made between those who have experience in setting up such networks and those who wish to do so.
However, figures given in Ofcoms Annual Communications Market Report 6 consistently show broadband uptake in some deprived areas of Scotland falls badly behind that of comparable areas in other UK cities.This is not a question of lack of infrastructure so the underlying barriers to access and social causes must be identified and addressed.

To consider what work is required by the Scottish Government, infrastructure providers and others in order to expand Scotlands digital infrastructure 9 The Scottish Government should formally adopt the key recommendation of the RSE Digital Scotland report as a strategic goal: every circle drawn on the map of Scotland that includes a settled population of at least 2,000 people should include a backhaul hub providing an open fibre connection to the internet. 10 The provision of this core infrastructure will require leadership from the Scottish Government. As with transport, or energy, Ministers must develop a big picture of national digital infrastructure and a strategy to deliver it, including plans for the migration/ transformation of public sector contracts, in line with recommendations of the McClelland Report7. 11 It is vital that Scottish Government procurement should support the goal of delivering a backhaul hub to every community: all public sector fibre connections should also be required to provide an open access hub (where the community is not already served); any operator receiving public subsidies for rural broadband should also be required to provide an open access hub in each community they serve. 12 The Scottish Government should also investigate any regulatory changes that might be required to achieving Scotlands goals. Some regulations are based upon a UK national viewpoint which may be inappropriate to, and detrimental to, Scotland.

Remit of the Infrastructure and Capital Investment Committees Inquiry

4 The RSE comments on the three aspects that constitute the remit of the Committees scoping exercise below.

To assess the coverage, availability and uptake of broadband across Scotland 5 All three of these are severely limited by the current infrastructure, as is the missing factor of capacity. Until this is radically changed only a fraction of the population will have access to superfast broadband, and ultrafast a reality in many countries will remain non-existent 5. To consider the ways in which different local areas are working to promote access to broadband in Scotland, and how good practice might be shared 6 Evidence from local initiatives in Scotland and elsewhere suggests that there are no fundamental technical or economic obstacles to local access. Community initiatives have demonstrated effective and affordable access networks in some of Scotlands least-populated areas, showing how the final 10% can be reached. Some examples of these can be found in the Digital Scotland report.

5 In order to receive superfast broadband there cannot be more than a few hundred metres of copper in a connection to the internet. We estimate that Scotland is currently supported by about 10m kilometres of copper ~ 4km per household! At least 90% of this needs to be removed and replaced by fibre, or in remote areas by wireless. 6 www.ofcom.org.uk/cmrscotland 7 Report by John McClelland CBE, Review of ICT Infrastructure in the Public Sector in Scotland, June 2011, http://www.scotland.gov.uk/Publications/2011/06/15104329/20

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Objectives of the Infrastructure and Capital Investment Committees Inquiry
13 The RSE comments on the objectives of the Committees scoping exercise below: To obtain a picture of broadband coverage across Scotland in order to highlight any areas where connectivity is low and to understand the reasons for this 14 It is easy to obtain such a picture.The necessary surveys are in place and are reported by Ofcom.The key obstacle to the provision of broadband is the lack of open access to backhaul. To examine different local projects currently engaged in promoting the availability and roll-out of broadband, with a view to highlighting examples of good practice, the variety of technological solutions being applied; identifying barriers and obstacles faced etc 15 There are many local initiatives which provide examples of good practice for the roll-out of broadband for local access networks. The key barrier the absence of a fibre backhaul infrastructure to which these networks can connect remains. Once this infrastructure is in place, the majority of last-mile development will be carried out either by the market or by communities. The Scottish Government will have a role in monitoring this activity, and identifying areas where it doesnt happen. 16 There are a number of secondary barriers faced by local projects which Scottish Government support would help to overcome, for example in obtaining wayleaves to enable the laying of fibre. Where civil works are being carried out anyway, an obligation by government to consider the laying of fibre alongside such works would overcome much future disruption. 17 The Scottish Government should also work with Ofcom to ensure that UK regulations allow spectrum to be exploited effectively in sparsely populated areas, in which there is much less pressure on spectrum than in towns and cities. Further, it should ensure that State Aid regulations are interpreted in such a way that they do not obstruct the ability to provide open access through publicly supported projects (this was a fundamental issue with the Pathfinder project). To scrutinise the Scottish Government and its agencies progress towards meeting the commitment that next generation broadband will be available to all by 2020, with significant progress made by 2015 18 In 2001 the then Scottish Executive identified the main obstacle to accessing increasing internet speeds as a lack of appropriate backhaul.As far as we know little, if any, progress has been made. In any case, progress is difficult to gauge as no open register of existing nor planned infrastructure is available. 19 The current goal of 2Mb/s by 2015 is already being overtaken by competitors. Moreover, it can largely be met without addressing the fundamental issue, by patching the existing infrastructure. If this is done, Scotlands position by 2015 will be disastrous, for example rural India will be well ahead of rural Scotland. To scrutinise the Scottish Government and its agencies progress towards meeting the commitment that the rate of broadband uptake by people in Scotland should be at or above the UK average by 2013, and should be highest among the UK nations by 2015 20 Scotland should act independently and set its sights higher than the current UK goals. It should align itself to the recent EU objectives. Uptake is largely driven by availability, affordability and the range of services available. Unless these are adequate, we cannot expect there to be satisfactory uptake. 21 However, evidence already shows that, even where broadband is available at a competitive speed and price, uptake can remain low, particularly in deprived areas. Underlying socio-economic issues, the lack of skills and confidence to go online, and the perception that the internet is not for everyone, must also be understood and addressed. We welcome the recognition of the need for action on Digital Participation in Scotlands Digital Future Strategy and the Digital Participation Charter signed by the Scottish Government and others on 7 November, and look forward to the Committees scrutiny of progress. To consider what the Scottish Governments strategic role in the development of broadband infrastructure should be 22 The strategic requirement, which must be led by the Scottish Government, is to lay the physical fibre infrastructure.Around 1,700 open access hubs, strategically placed, would suffice to reach every community in Scotland.We estimate that existing fibre would be sufficient to service around half of the hubs needed, and that less than 2,500km of new fibre will be required, to complement existing private and public sector assets. Figures on the costing and financing of the additional fibre required are provided in Appendix 1. 23 The same level of open access to backhaul will be needed both for new fibre and where there is fibre already installed. Unfortunately, it is not in the interest of existing providers to provide open-access backhaul connections. 24 There are many opportunities for competition in the access networks, but incumbents will naturally seek to minimise these. For example, the introduction of a wireless access network to compete with existing local loop delivery, provision of dedicated business connections, and 3/4G mobile data coverage, all require backhaul access that is not covered by current Ofcom regulation. 3

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25 Even where existing operators have, or will install, fibre, intervention will be required to ensure that it is open to innovation and exploitation. 26 The Scottish Government should use the leverage afforded by existing public sector spend on digital connectivity to ensure that existing assets contribute to Scotlands core infrastructure, and that new investments supported, directly or indirectly, from public funds are managed in the public interest to maximise their use and the benefits they bring. To assess Scotlands progress in upgrading its digital infrastructure against the targets and objectives set by the European Union 25 The Digital Scotland reports recommended goal for 2020 was for every community to have access to 128Mb/s. This is well-aligned with the 100Mb/s EU targets for ultrafast broadband and is achievable. One small but significant progression towards this goal is the deployment of community networks such as that on Eigg, which can already deliver 100Mb/s within the network, but which are limited by lack of backhaul and resulting slow speeds to the global internet. 28 An effective way to deliver Scotlands goals for 2015 would be to establish the core infrastructure network by that date.This could easily be designed to accommodate the requirements of the EU 2020 objectives8. To assess how opportunities to receive project funding from, for example, the UK Government and the European Union are being fully exploited 29 It is essential that we use this funding effectively. The Scottish Government should maximise the contributions it makes: to establishing the core strategic network of open hubs; to ensuring that even those who do not have a domestic internet connection are able to get online within their communities; and to stimulating the innovative use of Scotlands connectivity to enhance Scotlands economic, social and cultural well-being. 30 The current procurement processes for using BDUK funding are not transparent, which leads many local authorities, communities and businesses uncertain as to how to develop their own strategies, and leads them to believe that the investments are not being effectively exploited.

Conclusion
31 The RSE welcomes the Infrastructure and Capital Investment Committees recognition of broadband infrastructure in Scotland as a key priority issue. Action on the provision of such infrastructure is increasingly urgent as Scotland falls further behind its competitors. In order to place Scotland firmly at the fore of the digital revolution, and to access the benefits that this will bring, the RSE calls for the Scottish Government and Parliament to commit to the creation of a backhaul fibre network that brings an open access hub to every community in Scotland.

Additional Information
Advice Papers are produced on behalf of RSE Council by an appropriately diverse working group in whose expertise and judgement the Council has confidence.This Advice Paper has been signed off by the General Secretary.

Any enquiries about this Advice Paper should be addressed to the RSEs Consultations Officer, Susan Lennox (Email: evidenceadvice@royalsoced.org.uk) Responses are published on the RSE website (www.royalsoced.org.uk).
Advice Paper (Royal Society of Edinburgh) ISSN 2040-2694

8 A backhaul provision of 1Tb/s is sufficient to support a 100Mb/s service for 1,000,000 subscribers at a contention ration of 100:1.This is well within the capacity of current fibre backbone technologies.

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APPENDIX 1: Costs of installing and operating broadband infrastructure in Scotland
To enable innovation and the exploitation of the opportunities this will bring, open access to the backhaul network should be available to every community. This would be achieved by implementing RSE Digital Scotland report recommendation, that: every circle drawn on the map of Scotland that includes a settled population of at least 2,000 people should include an open backhaul hub providing a fibre connection to the internet. The figures that follow attempt to quantify the costs and impact of implementing this recommendation. These are, necessarily, rough figures. Robust costings would require much detailed planning. Work done since the publication of the RSE report has established that the required coverage could be achieved with approximately 1,700 digital hubs (each serving more than 2,000 people). A resilient core network connecting all 1,700 hubs would require approximately 5,000 km of fibre.The RSE report estimates that at least half of this fibre is already in place. This gives a conservative (i.e. pessimistic) estimate of 2,500 km for the amount of new fibre required. For ease of calculation, we will assume that this new fibre serves 1,000 new hubs, each accessible to approximately 1,000 potential subscribers (2,500 population), 50% of whom subscribe. This uptake figure is conservative, since we assume that no other high-speed backhaul is accessible to these subscribers. The BIS Broadband Strategy Group reports that the costs of laying rural fibre range from 15/metre to 40/metre.9 Taking the higher figure gives a pessimistic estimate of 100m for laying the dark fibre. Benchmarking against the Fibrespeed network in N.Wales suggests a cost of 10m per annum for operation of the backhaul network (which includes provision and periodic upgrading of active equipment). We have obtained commercial estimates10 for the costs of delivering an internet connection, via a backhaul network connecting to, for example, Manchester, to a community network linking to such a hub.A dedicated 500Mb/s symmetric connection (which would provide 500 subscribers with a 100Mb/s service at a contention ratio of 100:1, or a 25Mb/s service at 25:1) can be procured at a cost of less than 30 per subscriber per annum. Scaling to the Scottish level, 10m per annum would be sufficient to pay off 100m capital investment over 15 years (assuming interest @ 5%).Therefore, 20m per annum, is required to cover the 10m operating costs of the backhaul network and repayment of capital investment in the backhaul network.This amounts to 20,000 per hub per annum, or 40 per subscriber per annum. We also have seen a robust business plan for providing and maintaining a local access network serving a remote community with 45 subscribers11, based on income of 180 per subscriber per annum. Thus, even under our pessimistic assumptions, next-generation speeds could be provided to our most remote communities at a cost of 250 per subscriber per annum.This is the sum of 40 costs for the core network, 180 for local access and 30 for the internet connection, Most communities will be more accessible, so their access costs will be lower. Furthermore, for 500,000 subscribers, the backhaul requirement would reach 0.5Tb/s, and we would expect the internet connection charges to be significantly less than those quoted above (which are based on an aggregated requirement of 1Gb/s). Finally, these rough calculations take no account of income from other users of the core network, such as business users and mobile service providers.

9 Current industry estimates use a figure of 30/m, which would reduce this cost to 75m. (Fujitsu, personal communication, Nov. 2011) 10 Lancaster University Network Services 11 These costings are for a 100Mb/s wireless network serving Muck, Rum, Canna & Elgol

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